The Netflix logo is is shown on an ipad in Encinitas, California, April 19,2013. REUTERS/Mike Blake
(
MIKE BLAKE
)

The two companies did not disclose what Netflix will pay, but the Los Gatos video-on-demand firm called it "the largest deal for original first-run content in Netflix history" in its news release Monday. Netflix already beat out HBO for the rights to DreamWorks movies in a deal the companies signed in 2011, which kicks in this year, and they are also collaborating on a cartoon tie-in to DreamWorks' upcoming "Turbo" movie.

Advertisement

Executives from both companies praised their partners Monday. "Netflix is a visionary company that continues to redefine the way audiences watch television," DreamWorks Animation CEO Jeffrey Katzenberg said in Monday's announcement, while Netflix Chief Content Officer Ted Sarandos called the new contract "a major expansion of what's already a phenomenal relationship."

Children's programming is one of the biggest battlegrounds as Netflix tries to fight off competitors in the streaming-video market: Amazon recently beat out Netflix for exclusive rights to some Viacom programming including "SpongeBob SquarePants," "Dora The Explorer" and other popular kids' shows in its biggest deal to date, underscoring the importance. Monday's move could more than make up for that loss to Amazon because the Viacom shows will still be exclusive to Viacom's cable networks before migrating over to Amazon's Prime service, while Netflix will be the only home for specific DreamWorks productions.

The deal signals Netflix's growing stature among content producers, Jefferies Group analyst Brian Fitzgerald told Bloomberg News. "Netflix is starting to get to a degree where content companies are considering them a viable distribution partner," and are "coming to Netflix for deals instead of vice versa," he said.

Netflix stock jumped more than 7 percent, its best one-day performance since April, giving it the most successful session of any company in the Standard &Poor's 500 index. Netflix is also the best-performing S&P 500 stock so far in 2013, gaining nearly 150 percent on the year. Shares closed at $229.23 after a gain of 7.1 percent.

And the widely watched Standard & Poor's 500 index: Up 12.31, or 0.76 percent, to 1,639.04

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.